Nelson's sales pitch: students to owe billions

By Aban ContractorMay 17 2003

The federal Education Minister, Brendan Nelson, sold his blueprint for higher education changes to cabinet by promising to shift billions of dollars of tuition costs to students and their families over the long term.

Dr Nelson's confidential cabinet package promised that by 2012-13, FEE-HELP - a new loan scheme to help fee-paying students in public and some private institutions - would generate more than $784 million.

OS-HELP, a similar scheme for Australian students studying overseas, would make more than $307 million, the documents said.

Students will pay these contributions directly to universities and be required to repay their commercial-style borrowings from the government scheme at a rate of interest set at 3.5 per cent above the consumer price index.

The cabinet papers identified a further scheme, "Education HELP", which tagged savings of more than $700 million by 2012-13, but it did not appear in the budget papers.

Other savings as a result of allowing universities to set course fees up to 30 per cent higher than the current HECS levels, would allow the Government to shift an increasing level of debt off its books within the decade.

"Cabinet was told that in its first eight years the new Higher Education Loan Program would deliver more than $2 billion [in savings]," according to a government source.

According to Education Department figures, by 2005-06, when the new loan program begins, students will owe more than $11.5 billion.

Dr Nelson's spokesman did not return calls yesterday.

However, following the budget, Dr Nelson argued that the changes were fair and that, for most students who chose to be covered by the Higher Education Contribution Scheme, the great bulk of costs fell to the Government.

"For the first time, universities will be required to think about what their courses are worth, what is a reasonable fee to charge their students," Dr Nelson said.

He said for students supported by a HECS loan, "the Australian taxpayer [pays) about, in the long term, 73 per cent of the cost of university education".

Labor's science and research spokesman, Kim Carr, said while the Government had failed to index operating grants and research grants, it was only too happy to index student debt.

"University requests for funding for research infrastructure are currently four times higher than the money available," Senator Carr said.

"There is little to suggest that that funding will improve.

"This package will do little to stem the brain drain of our scientists and researchers overseas."

Under the new arrangements, from 2005 the Federal Government pays considerably more to universities for courses such as nursing and teaching but much less for subjects such as law.

The highest contribution will be for training students in agriculture ($16,394 per student), followed by doctors, dentists and vets at $15,422.

The Commonwealth contributes $7278 for education students and $9733 for nursing. At the other end of the scale, the Commonwealth will pay just $1509 to universities for each of their law school enrolments, meaning that the overwhelming majority of costs will be borne directly or indirectly by the students.